All Eyes on Closing Levels

As the US and our XE and Euronet colleagues across the big pond celebrate Thanksgiving Day; there has been a subsequent drop off in trading ranges and liquidity. But that hasn’t stopped the on/off US China trade tariffs deal taking a somewhat surreal turn. China stating that they would be very happy for President Trump to serve another term in office, and seeing him as a man they can do business with. A conciliatory tone, bearing in mind the messages emanating yesterday after Senate support from Hong Kong. As a consequence, the USD continues its positive course, and for this of us in the UK it’s a familiar refrain. “Up by the stairs, and down by the lift” for GBPUSD. Just as the symbolic 1.3000 looked set to give way, the retreat began.

This was the theme across the board yesterday, following the MRP YouGov poll pointing to a somewhat surprising convincing victory for the Conservative party. There is a feeling there was a collective sense of disbelief in the London time zone at such a disparity from other polls. More of “we have been here before, and the result didn’t necessarily play out “ was the chatter amongst currency participants. And so, GBP retraced. Not massively, but enough. Overnight a mixed bag of UK economic data releases with the GFK consumer data -14, aligning with recent retail sales numbers. With the iconic Black Friday sales upon us today, how will our spends be affected pre-election? On the positive side the Lloyds bank business barometer had its strongest showing since January, and a continuation of strong releases in past months. This survey tracks over 1,000 businesses and does shine a light away from Brexit related concerns. Is this a pre cursor to a GBP rally after the election? Are business wound up like a coiled spring ready to let loose in 2020?

Over in Asia Pacific our Commonwealth friends are still seeing pressure on their respective currencies. The NZD feeling the heat on housing pressures, and next week In Australia the central bank the RBA makes its interest rate call on Tuesday. There is also a slew of Australian data for the beleaguered AUD. Although economists only attach a 10 per cent chance of an interest rate cut, the shadow of recent data has cast the AUD lower into year end. GBPAUD still forges ahead and is a currency pair we firms have our eyes on as a potential large mover.

Finally it’s month end balancing of books today and we would expect to see some interesting closing levels at 1600hrs GMT, as well as during the New York session where there will likely be thin liquidity post Thanksgiving Day. We could get see GBPUSD close to 1.30 in these types of conditions. Time will tell.

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